Ok, OK, very dumb question coming your way.
We buy a property at a discount to the Market value, which is Cash positive. When we wish to purchase another property, we are out of cash/equity in our own home so we use the equity in our IP to purchase our new IP,which we will make sure is Cash positive. Heres the dumb part.
Will the lenders give us a decent LVR as our first property will probably now not be Cash positive? I am struggling to work out how it all works, and I dont wanna argue with the missus any more on how it works!!! the guys just dont win the fights!!!!Thanks in advance,
Brent[xx(]
Hi Brent,
That’s not a dumb question at all. In any property lending scenario the maximum LVR the banks will lend to are dictated by two things – primarily location, hence ease of resale, secondly full disclosure of ability to repay loan by the borrower. Different lenders have different spins on the risk levels they are willing to lend up to which is why both you or your wife may be right about the ability to use the equity in your IP for further investment …. [
]If you’d like to pose a specific scenario some of the forum brokers and experienced investors will be able to help you. I am a broker based in Brisbane and can be reached by email below if you’d like a more detailed review.
[
]
Mel
[email protected]Hi there and thanks for your reply.
Not sure that I am doing this right but here goes.
We have enough cash to buy two of the cheaper type I units up here, however I have heard stories, no doubt true, about how people just buy one after another pos geared property. These people must be getting the deposit from somewhere. I must admit, the missus is still hogging Steve’s book ( PS hello legend if you read my post )and I havent got to the bit where he must have organised finance for the 2nd, 3rd 40th 50th property. Any hints from a Mortgage broker, from your point of viewThanks once again,
Brent
quote]
Hi Brent,That’s not a dumb question at all. In any property lending scenario the maximum LVR the banks will lend to are dictated by two things – primarily location, hence ease of resale, secondly full disclosure of ability to repay loan by the borrower. Different lenders have different spins on the risk levels they are willing to lend up to which is why both you or your wife may be right about the ability to use the equity in your IP for further investment …. [
]If you’d like to pose a specific scenario some of the forum brokers and experienced investors will be able to help you. I am a broker based in Brisbane and can be reached by email below if you’d like a more detailed review.
[
]
Mel
[email protected]
[/quote]basically you will have to keep comming up with 20% deposits (at least) to keep on going. You can get the deposits from many sources including capital growth, savings, joint ventures, etc. If your properties are cashflow positive this helps a lot.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi Brent
I am new to this myself but from my understanding of Steve’s method is that when he maxed out his deposits for buy and hold properties he then wrapped the next 10 to 20 properties or so – which then gave him additional savings and capital gain to leverage more finance for more buy and hold properties.
And so the cycle goes on and on.
One of my reasonings for this is 0 – 130 properties in 3.5 years at an average of say 60K each at 20% deposit plus closing costs of 5% would be $1,950,000 or $560,000 per year.
What do you need to chase properties for if you have over 1/2 million income each year???
rgds
Cobra
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